UK gambling operator William Hill is set to beat analysts’ estimates for annual profit, despite heavy regulatory pressure in domestic and international markets, the company said in its latest trading update.
William Hill has had turbulent past several years as its digital arm lagged behind its competitors, it failed to jump on the industry consolidation bandwagon as swiftly as rivals GVC Holdings, Ladbrokes Coral and Flutter Entertainment (formerly Paddy Power Betfair) did, and regulatory pressure in its domestic market keeps mounting.
But despite another year of major challenges, the major bookmaker finally saw some consistent positive developments coming its way.
The company said in today’s trading update that it now expects operating profit for the 52 weeks through December 31, 2019 to be in the region of £143 million and £148 million, ahead of both market and management expectations. According to earlier projections, the gambling operator was expected to record annual profit of around £130 million.
William Hill attributed the better-than-expected performance to favorable sporting results through the reviewed year’s end. The company said today that during 2019, it made “good progress” towards delivering its long-term strategy to become a “digitally led and internationally diversified business of scale while continuing to embed a culture of responsible gambling.”
William Hill is set to reveal its full results for 2019 in late February.
Retail Arm Performs Ahead of Expectations
William Hill said that its UK retail business performed ahead of expectations, despite last year’s crackdown on one of the highest grossing products offered in the local market. The British government last spring reduced the maximum stake on fixed-odds betting terminals to £2 from £100 as part of a larger campaign against the proliferation of gambling in the nation.
William Hill’s retail business was hit heavily by the state cut, which prompted the company to flag the closure of 700 betting shops around the UK. The operator said in its trading update that despite the challenges and thanks to favorable sports results in December, its retail arm generated operating profit above the guided range of £50-£70 million.
Its UK digital business maintained its growth in line with the market for a third straight quarter, William Hill also noted. The company pointed out that weakness in online gaming revenue was offset by a strong sports betting gross win margin.
The bookmaker saw mixed performance of its international online operations last year, saying that it now expects net revenue to be broadly flat during the fourth quarter of the year. William Hill’s international sports betting revenue was weak, but its gaming offering enjoyed good performance driven by Mr Green, the Swedish online gambling group that William Hill acquired early in 2019.
US Growth
William Hill’s US sports betting business continued to generate strong growth during the last quarter of 2019, thanks to “wagering growth and disciplined investment.” The company said it now expects to be breakeven for its US business, compared to the earlier annual guided loss of up to $20 million.
William Hill has entered multiple states since a federal ban on sports betting was annulled in the spring of 2018, seeking to cement itself as one of the leaders in the provision of wagering products in the nascent US market. The company has also expanded its presence in Nevada, the only state where sports betting had been legal prior the 2018 strikedown of the federal prohibition, most recently through the acquisition of the sportsbook assets of troubled CG Technology in the Silver State and the Bahamas.
Commenting on their latest trading update, William Hill Group CEO Ulrik Bengtsson said that they have “delivered a strong operating performance, ahead of our expectations and against a challenging regulatory backdrop” and that they “made good progress on a number of fronts” that would enable them to deliver on their long-term strategic ambitions.
Source: William Hill PLC Trading Statement
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